BISMARCKâ€”Property tax relief, more money for infrastructure needs in oil country and improvements to college campuses are among the funding priorities that Gov. Jack Dalrymple outlined in his first budget address today.
Dalrymple presented his speech in the House chamber before state lawmakers, members of the public and statewide elected officials.
The 2011-13 executive budget was created with input from the state Office of Management and Budget, cabinet agencies and the Governorâ€™s Office.
â€œTogether, I believe we have produced a budget for the people of North Dakota that is farsighted and pragmatic, a budget that will continue to lead our state forward,â€ Dalrymple said.
The â€œoverarching messageâ€ of the budget is to fund priorities, provide tax relief and build reserves for the future, he said. Hereâ€™s a breakdown by topic area:
Infrastructure in the west
Under Dalrympleâ€™s proposal, $958 million would be allocated to benefit the stateâ€™s 17 oil and gas producing counties. Of that, $371 million from the permanent oil tax trust fund would be for state, county and township roads in oil country.
The state Department of Transportation would set the priorities for the $229 million for state roads, using the same procedures normally used for needs, Dalrymple said.
The $142 million for county and township roads will be distributed according to a comprehensive study recently finished and with input from the DOT, Dalrymple said.
Dalrymple recommends an emergency clause for the county and township funding so projects can begin.
Dalrymple also proposes $100 million for the Oil and Gas Impact Grant Fund. Right now, this fund has an $8 million cap per biennium and is funded with money from the 5 percent gross production oil tax.
Money goes to political subdivisions negatively affected by oil and gas activity. Most of the funding is used for infrastructure repair and improvement projects.
The Energy Development Impact Office received $31.9 million in grant requests this year for the $4 million available.
Office of Management and Budget Director Pam Sharp said there would need to be a change in law to raise the cap on the fund and revise the tax formula.
Dalrymple said heâ€™d like to see $35 million of the amount go to the largest and fastest growing cities. The remaining $65 million would be for smaller cities, counties, townships and other entities.
In addition, other state funds that benefit oil and gas counties through oil tax collections are expected to reach $247 million.
Dalrymple also said $240 million in regular state and federal highway funds â€œthat would happen anyhowâ€ is budgeted for the Williston, Minot and Dickinson DOT districts.
This includes â€œsuper-twoâ€ construction on U.S. 85, he said.
â€œThis region of North Dakota is doing its share to build North Dakotaâ€™s economy, and we need to do our share to help them with their challenges of growth,â€ Dalrymple said.
Dalrymple also proposes allocating $25 million for the Williston region for a new municipal water supply system.
Infrastructure in the east
â€œIn the Red River Valley, flood protection is an essential, long-term priority,â€ Dalrymple said. â€œWe need to end the annual anxiety caused by chronic flooding, especially in the Fargo-West Fargo area.â€
Dalrymple reaffirmed the stateâ€™s commitment of about $300 million over 10 years for a flood diversion project.
The budget sets aside an additional $30 million from the Resources Trust Fund for a total of $75 million in initial funding, he said. This trust fund receives money from oil tax revenue and is used to construct water-related projects and to fund energy conservation programs.
For Devils Lake, Dalrymple proposes committing up to $120 million to construct a second outlet on the east end of Devils Lake, expand the existing outlet on the west end and build a control structure on Tolna Coulee.
Not all of that moneyâ€”which will also come from the Resources Trust Fundâ€”would be allocated during the 2011-13 biennium, Dalrymple said.
As far as infrastructure needs elsewhere, Dalrymple said heâ€™s â€œnot completely ignoring everyone elseâ€ and â€œunderstands needs in other areas.â€
â€œWe feel that the regular highway fund appropriation can cover all of those needs,â€ he said.
Dalrymple proposes dedicating 25 percent of the state motor vehicle excise tax to the state highway distribution fund, so an additional $46 million is available for roads. Of that, $17 million would flow directly to counties, cities and townships, he said.
Property tax relief
Dalrymple proposes $350 million go toward property tax relief and $150 million for income tax relief. This would bring the total tax relief from 2009-13 to $900 million.
â€œIt is important that the hard-working men and women of North Dakota see a substantial share of our economic gains reflected in their tax bills,â€ Dalrymple said.
For a family making between $60,000 and $80,000 with a $150,000 home, overall this would mean between $750 and $850 in savings in property and income taxes per year, Dalrymple spokesman Jeff Zent said.
Dalrymple, chairman of the stateâ€™s Commission on Education Improvement, is supporting $102.3 million in increased funding for K-12 education.
This includes $54.3 million to complete school funding adequacy. There is also $32 million to increase the per-student payment by $100 each year of the 2011-13 biennium.
Dalrymple also proposes $7.5 million be set aside for school districts interested in creating an alternative teacher compensation system. An additional $8.5 million is proposed for transportation, principal mentoring, early childhood education and other initiatives.
Dalrymple proposes an increase of $82 million in ongoing funding and $46 million in one-time funding for the 11 colleges of the North Dakota University System.
This should allow tuition at two-year schools to be held even and four-year schools to limit tuition increases to no more than 2.5 percent per year, he said.
Dalrymple supports five major capital projects for the University System, including a joint University System/University of North Dakota information technology facility.
The other projects are the Rhoades Science Center addition and renovation at Valley City State University; funding for the Stoxen Library at Dickinson State University; the final phase of the research greenhouse complex at the North Dakota Agricultural Experiment Station in Fargo; and the Old Main renovation at the North Dakota State College of Science in Wahpeton.
Dalrymple said he also allocated $5 million for a new approach to higher education funding based on desired educational outcomes. For example, this could look at degrees awarded, students graduating on time and degrees completed by low-income students, he said.
Dalrymple said the plan is to ask the State Board of Higher Education to work with him to establish a new Commission on Higher Education Funding. The group would work to develop recommendations to improve the equity, transparency and effectiveness of higher education funding.
Dalrymple also recommends higher education salary increases of 3 percent each year of the biennium. However, 1 percent of each year will be devoted to the teacher fund for retirement, he said. The state would match the 1 percent and fully fund the increase in employee health insurance, he said.
Youth and human services
Dalrymple said he welcomes legislation regarding a tiered or graduated driverâ€™s license program. He also spoke of the headlines about teen suicide rates.
â€œThese highlight the need to make more resources available for critical mental health services for our citizens,â€ he said.
The budget recommends an increase of nearly $8 million across several agencies to address the mental health challenges in the state.
This includes $6.1 million for the Department of Human Services to fund psychiatric in-patient care, additional local resources to help stabilize patients suffering a mental health crisis and more resources to treat chemical dependency, he said.
He also recommends $1 million for suicide prevention efforts by the state Health Department and an additional $100,000 to help fight youth suicide on reservations.
The budget includes $900,000 for campuses and high schools to help address mental health problems among students.
Long-term care and public employees
Dalrymple proposes a 3 percent increase each year of the 2011-13 biennium for nursing homes and other health care providers, as well as for providers serving people with developmental disabilities and mental illness.
He also recommends a 3 percent salary increase each year of the biennium for public employees and fully funding the increase in public employee health care premiums.
The total budget is $9.3 billion, said Sharp of the Office of Management and Budget. The breakdown is roughly one-third general fund, one-third federal funds and one-third special funds, she said.
The general fund ongoing revenues for 2011-13 are projected to be about $3.197 billion, with $3.185 billion in expected in spending.
Dalrymple said the budget recommendation represents an increase of 5.6 percent in spending per year. However, he said itâ€™s important to note that more than half of the increase is due to reduced federal funding in human services that the state needs to replace.
Excluding the $174 million in discontinued federal funding, the increase in general fund spending is 2.7 percent per year, he said.
The 2011-13 executive budget neither borrows nor bonds and imposes no new taxes or fees, Dalrymple said.
The latest projections show the state ending the biennium on June 30 with a $1 billion surplus: $80 million left in the general fund, $620 million in the permanent oil tax trust fund and $325 million in the budget stabilization fund. However, money can only be spent from this last fund if thereâ€™s a revenue shortfall.
The executive budget anticipates a $1.2 billion state surplus by June 30, 2013. Of this amount, $619 million is expected in the Legacy Fund. In the November election, North Dakota voters approved the creation of the fund, which will be supported with oil tax revenue.
State lawmakers will spend the coming months of the legislative session hashing out the budget before it is finalized.